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The Kudlow Report

News/Business. Larry Kudlow. Larry Kudlow provides his unique perspective on business, politics and investing. New.

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Baker 7, Egypt 6, U.s. 6, Dan Mitchell 5, Michael Cannon 5, Us 5, America 4, Ron Pollack 4, Geico 3, S&p 3, Washington 3, Spitzer 2, Eliot Spitzer 2, Robert Rubin 2, Rick Perry 2, Larry Kudlow 2, Scottrade 2, Seema 2, Perry 2, Ron 2,
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  CNBC    The Kudlow Report    News/Business. Larry Kudlow. Larry Kudlow provides his  
   unique perspective on business, politics and investing. New.  

    July 8, 2013
    7:00 - 8:01pm EDT  

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. >> i like to say there is always a bull market somewhere. i try to find it just is obama care dead? more delays and big changes for obama care. we know the employer mandate has to wait for a year. now comes the liar subsidies meaning no income applications for income applicants just like the housing bubble, remember? by the way, don't forget the small business insurance exchange was killed last month. folks, the individual mandate is next. how about the stock market? that's better news. major index was almost back to
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the highs before ben bernanke and his de facto tightening. here's a question for investors, is it possible that junk and bond rates has already anticipated the end of fed bond buying? and finally, has america become a part-time economy? is every new job temporary? friday's job report stronger than you think? all of those stories and much more coming up on "the kudlow report" beginning right now. we begin tonight with another setback for obama care. the department of health and human services says it will not even try to verify eligibility for insurance subsidies. does that make them like the housing bubble's liar loans? remember that? last week we learned the employer mandate is waived. now they can't verify the claims and they're trying to get help
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from the nfl? that's not happening either. and biggest question is the individual mandate the next to fall? maybe obama care is just crumbling under its own weight. let's talk about all of this. we have ron paul, executive director of families u.s.a. and the chairman of the boards of directors of enroll america. we welcome michael cannon, director of health policy studies at decato institute. ron paul, let me begin with you and say that the evidence suggests as the dominoes fall, so will obama care. >> well, it's not going to fall, come october one these new marketplaces will be in operation and those people who have incomes below 400% of poverty for a family of four, that's $94,200 in annual income, for an individual living alone it's $46,000, they will get subsidies that will make health coverage a whole lot more
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affordable. >> with all due respect, i know this is your line. i appreciate your point of view. i get that. but you know what, let me go to michael on this. where is this money coming from? if the corporate exchange is down, if the corporate mandate is down, young people are not going to buy this stuff. the small business exchanges are down. the exchanges themselves don't have infrastructure in over 30 states. i don't understand where the dough is going to come from to hand out all of these subsidies. >> it's going to come from taxpayers. it will increase the deficit. back in january i predicted that the obama administration would not have these exchanges ready on time, and what they just admitted is that they won't have the anti-fraud measures ready on time, but they said, who cares. we'll just blow the doors open. leave the federal treasury open. let people claim subsidies i will legitimately. you remember in the home stretch before president obama passed obama care president obama swore
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up and down that he would fight for health care. he said he would eliminate every instance of health care fraud in the government. the worst part is, he doesn't have the authority to do this. >> i want to get to that in a minute. i want to ask one quick follow-up. regarding the lack of income documentation for ineligibility, this is so much like the housing crisis of years ago it's unbelievable because then liar loans were handed out with no income and no documentation. why is this any different, michael cannon? this is the health care version of the housing bubble. >> it's not any different and the obama administration knows that this law is still vulnerable so their defense strategy is that if we just throw bags of cash at people, then we'll be able to get by more obama care voters, and there's something to that. if you make people dependent on government, people will vote for bigger government and higher taxes. that appears to be their strategy here. >> you know, ron poll lack, i
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know you'll come at me with these subsidy thing. i'm trying to get you to vote on the individual issues. you can't tell me if the businessman date goes down and the liar loan verification eligibility mandate goes down, you can't tell me that this doesn't undermine the entire infrastructure of the system. you can't tell me, for example that, this isn't an example of central big government run completely amuck and that's why i think this whole system dies rather than be thrown away. >> we were talking about before where does the money come from and what i heard, unfortunately it's untrue, is that this is coming by an increased deficit in the federal government, and that's just simply untrue. the referee, the nonpartisan referee, the congressional budget office says it will decrease the deficit in the first ten years by 135 -- >> that's not true. >> one at a time. one at a time. hang on.
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ron pollack, i must. i've got to exercise the chairman's role here. i'm asking you a specific question. i don't want a general answer. i want a specific answer. if you -- if you don't subsidize the businesses, the businessman date is off and if you cannot verify individuals in the marketplace and you're just going to give everybody loans and you know that over 30 states there is no insurance exchange, i want you to address these specific items. in fact, they even got rid of the small business insurance exchange, which was supposed to have choice. they can't get the mandate. they can't get the verification. they can't get the small business. and they can't get the state exchanges in 30 states. how in the world, putting aside the theoretical subsidy, how in the world does this operation operate? that's what i'm asking. >> so first you asked about subsidies to businesses, and, indeed, there are subsidies for small businesses, and those are going forward. those already have started with
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up to 35% tax credits for those small businesses with fewer than 25 workers, and that's going to be increased up to 50%. now with respect to verification, these tax credit subsidies are provided via the irs. when i file my taxes like when you file the taxes, i may file a 1099 form, but if i am working as an independent contractor or if i have tips, there is no subverification for it. however, there is a very significant penalty that people know that if they say something incorrectly and they're fra fraudulently getting benefits. >> they'll never know. ron pollack. you're too smart. michael cannon, let me ask you this. this is a little bit different question. what gives the administration the right to willy-nilly change laws which were passed by the
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congress and signed by the president? we have now seen several examples of that. what gives them the right to do that, michael cannon? >> they don't have the right to do that. the laws that president obama is implementing would not have passed congress and did not pass congress and as bad as throwing the anti-fraud measures and employer mandate out the window is, what they're doing with those subsidies, they're not supposed to be available and ron knows they're not supposed to be available. 2/3 of the states have rejected a health care exchange. the law made the medicaid subsidies condition on state cooperation but president obama is trying to spend $800 billion in those states without any congressional authorization whatsoever. getting rid of the anti-fraud measure pales in comparison to that. >> somebody who was conservative would say in 2/3 of the
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conservative states -- >> i'm not a conservative, ron. >> we should not be providing subsidies for people in the so-called red states. that's absolutely extraordinary. >> unfortunately, whatever your political point of view, ron, i appreciate it and i respect it, all i'm saying is the reality is as michael cannon and i think myself, is what we're describing. we know, we know with certainty that over let's see 30 states, over 30 states have no infrastructure for these insurance exchanges and the secretary of hhs is having to go around hat in hand to the very companies she's regulating to get them to fork over money. what i'm saying is this is no way to run a railroad. this whole contraption which i think will include the individual mandate going down is just dying of its own weight. that's all i'm saying. >> so in the states which are refusing to implement these exchanges, these marketplaces,
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the federal government is going to be doing it. it's really ironic that it is in the conservative states that governors have said, no, we don't want to set up the marketplaces. so in effect they've said, come on in, federal government, do you it. >> but i think the tenth amendment rules. >> ten to one they will be operational and people will start enrolling starting october 1. >> that's the point just with all respect, they will not be operational. i'll bet you a night's dinner in washington, d.c., i'm down there they will not be operational. >> i'm with you. dinner at pete's. >> wherever the heck you want. wherever the hot place is. ron police officer p-- ron pollack, is that going to fall? >> no -- >> i'm sorry, i want michael cannon to answer that. >> it's harder to enforce the individual mandate. it was a dead letter because it's not going to do anything to
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encourage people to purchase health insurance. >> in terms of funding this thing, you have yourself a republican house that is not going to lay on more funding for this thing. in fact, they'll have trouble getting funding through for the existing thing and that's another reason i think it's coming down. gentlemen, thank you. i don't know that we settled it. >> i'll like dinner with you. >> i'll be happy to, ron pollack. thank you for coming back on the show. now, folks, let's move on. stocks are moving tough as we move towards the slow down in fed buy back. in fact, stocks and interest rates may have already discounted the entire federal reserve action already. think of that. later on, look at this, video from egypt. can we expect more violence to come and can they form a new government at all? we'll have the latest on the egyptian fiasco. folks, don't forget free market capitalism is the best path to transparency. this absolute travesty as the health care obama care falls
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apart is the best example i know of why we should try the free market instead of government and statism. i'm kudlow, that's my view and we'll be right back. up meeting a lot more people but folks, don't forget free market t
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we turn to stocks and i ask you this question. did you know that while long term interest rates have gone up 100 bases points in the last year, mostly in the last two months, the s&p 500 has still gone up 19 p%? so while i still believe investors ought to be very careful as the fed policy tightens, they may still anticipate this. real interest rates growing up, the real economy going up, we have earnings going up. look, there are going to be bumps along the way, i know that. there's another thought from washington, and that is pro growth. pro growth on top of this real growth effect. suppose obama care dyes on the vine. think of that. suppose immigration visa reform brings the braniacs. that could all be pro growth as well as those rising interest rates. let's talk.
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we have steven nichols, market strategies kevin and michael osanian and seema. first of all, first reporting today alcoa beat by a penny. what does that mean? >> epsb, 7.5%. the ceo is pretty bullish about the rest of the year. he sees aluminum prices increasing towards the second half of the year. >> did he give a reason for that? >> expected to see an uptick in dmien. >> hope looms eternal. >> they have been falling for the past quarter. we might be seeing a bottom in the price so that could see some of that recoup fee an up tick in demand. >> the bank earnings, we'll get bank earnings later in the week, it will be a huge part of it.
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my kudlow dictum is as the rates go up and you have the steeper curve, as long rates go up much faster than short rates, even a banker can make money. is that going to happen? are they going to report profits? >> one of the best performing sectors this quarter. a couple of reasons for that. as you pointed out, higher capital market activity and improvement in credit trends. last thing is strong loan growth. those are the factors that analysts are expecting to help financials. >> loan growth? >> yeah. >> that would be bullish. that would be bullish. even mike ozania would think that would be bullish seriously. you hear them speaking about cni loans. what do you think about that? >> i'm all about king dollar. let's talk about the stronger u.s. dollar. >> yes. >> >> we have a tale of two separate markets, two separate economies. big cap stocks which is driving the s&p higher. small businesses doing poorly, not expecting to invest more in
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capital goods, not expected to increase hiring. which is why i think the gdp numbers are so bad. >> can i ask you one thing. big caps, less than 2,000. >> compared to small businesses. >> that's what i'm talking about. there's my concern right now. you have operating margins and gross margins lower. at any point in the last two years you had p ratios, enterprise race yeses. you're not a happy camper? >> large cap stocks, the s&p 500 right now. >> kevin, let me go to you. my theory, just a theory, watching the market action particularly after the relatively strong jobs report, heaven for bid temporary jobs are no good, the point i'm making is this, as interest rates have gone up, stocks have gone up with the exception of that one little period there when the fed said -- when bernanke was talking. is it possible that, a, the bond market has already discounted the end of qe bond buying?
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is that possible? >> a large part of it with the downpayment in the last six weeks or so. i felt that as the economy gets better, when we look at the data and it is getting better, you have retail sales up 4%, new home construction up 30%, home prices up 12%, new home sales up 12%, durable goods 8%, and my favorite statistic is that investment spending is a percent of gdp has gone from 10 to 11 to 12 to 13%. at the same time -- >> that's what we've been missing. so in effect these are rising real interest rates, talking about real gdp and hopefully real earnings although i think mike ozanian's point about earnings is delicate. what's your call about earnings? >> i think earnings are going to flatten. i think in part that's why the small cap is doing better. investors are hunting for earnings growth. in the large cap growth you do have peak profits. you do have revenue growth which has slowed down. >> really slowed down.
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>> maybe so slow -- that's a good point. maybe everybody is so barish, seema, on earnings and revenues, that there are going to be beats all over the place that will give us a better stock market. >> that's the strategy every quarter. analysts are putting expectations so low that the companies can outperform and beat street consensus. that is what we saw last quarter. >> we're smarter than this. consensus is 1 to 3% increase year on year for profits. that's the consensus. one for three. this is what's coming out of reuters, thompson and other consensus shops. just what we had in the last quarter. >> actually, in the last quarter earnings went up 6% despite the fact that revenues were lousy. in other words, these companies are exercising cost control magic, the likes of which we've never seen. can that be repeated? >> it can continue for a while, especially and importantly if
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investment spending continues because profits come from somewhere. investment spending is a big contributor to the overall equation for profit growth. that statistic i was talking to you about before with the improvement in reference spending, we have to focus on that like a laser beam. if that continues, can you see higher profits. i think what happens is you get maybe 5% profit growth in the overall average. investors have to dig down below that in order to find better earnings growth company by company. but, still, overall we have $117 of forward looking earnings under s&p. >> that's a good number. >> 7.2%. >> that's a pretty big number. where would you invest -- you don't buy fwonds? you're not going to buy bonds. >> i think the market is going to be extremely volatile. i'd go tore low volatility stocks. clorox, give me lorillard. great brands. >> great dividends. i think the dividends will help
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buttress anything. >> my argument that real interest rates are going up side by side with stocks, you're not buying that? >> the beginning of the segment where we had a better tax base, broader taxes on the market. if you do that then, yes. >> you saw summers today in the washington post. he called for a 15% tax rate on repatriated tax rates. we'll do a whole segment on that. i've got another one for you. suppose the best parts of the immigration bill, the parts where the visas are expanded for what i call the brain yaks, the kids that went to school here, are engineers, people coming in from around the world. suppose that goes through. suppose there's no more tax hike. suppose obama care keeps getting rolled back and roltd back. >> that's huge. if you go to the nbi study, one of the things that all of the small businesses that are the fuel of creating jobs in this country, they all krietd regulation, red tape and obama care. small people now know all of the qe stuff has not helped the
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economy. >> by the way, there's no inflation. i want to make that point. there is no inflation. >> totally blew up the credit markets though, totally. >> 0% interest rate. very long time considering how fast the economy's growing and when you x out the government part of the equation, doing great. >> drawing about 3.5, 4%. i've got to get out of here. i may be wrong about real interest rates in the stock markets. from my experience, i used to be a bond guy many, many years ago. came up the ranks. when long-term rates go up and stay up, short rates are sure to follow. long rates lead short rates, okay? the curve steepens and then it flattens. right now we're in the best part when long rates go up and the curve steepens. that's why banks will make a lot of money. if you tell me they're going to be making business loans, i'm telling you the stock market's going to make whoopie.
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kevin and michael and seema, appreciate it. look at this massive fire in canada is a bad story all due to a terrible oil cargo train derailment. seema mody will be back with the story. remember this. >> i'll make a decision later on in the year. i have to decide whether or not i'm going to run for re-election to the governorship. >> that's a tough decision for governor perry. governor perry's made that decision. we're going to tell you what that is next up on "the kudlow report." please stay with us. so... [ gasps ]
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at least 5 people are dead. a freight train carrying as much as a million gallons of crude oil derailed and exploded. at least 30 homes and buildings were in flames. texas governor rick perry is not running for re-election. he will not seek a third term as governor. he will finish out his term. he has a year and a half left. he did say today he is doing this to prepare for another run at the presidency in 2016.
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eliot spitzer is coming back. five years after he resigned as new york's governor over a prostitution scandal. spitzer says he will run for comp controller of new york city. >> aren't we lucky to have that? by the way, i'm a personal acquaintance with eliot spitzer. i'm not a political fan. the madam that's going to get him into all of the trouble is going to run against him. she's running on a libertarian line. she's going to challenge spitzer, bring up the past and everything and it is going to get ugly. i'd rather talk about rick perry who basically said to me at lunch the day he was on this show that he's going to make a second run for president, reminding me that richard nixon and ronald regan both ran and first lost and then won. >> it's a strategy that could
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work. >> it could work. seema mody, thank you very much. did you check that jobs report on friday? critics say too many jobs created are part time. is all of this valid? is it fair to call this a .part-time economy? stay with us for more. at farmers we make you smarter about insurance, because what you dont know can hurt you. what if you didn't know that it's smart to replace washing-machine hoses every five years?
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welcome back to "the kudlow report." i'm larry kudlow. in this half hour we have to ask, what is the end game in egypt. are we headed for a violent civil war? we'll ask an expert on the region. and a new report says larry summers wants to be the next fed chairman, but summers is also making news today with his plan for a corporate tax reform. we'll take a closer look in a few minutes. first up, wall street still bullish on friday's solid jobs report. a big increase in part-time workers a troubling hiring trend that could threaten the whole economic recovery? they're going tofor temp worker. 12% of all workers today are temps. that is up 50% since the recession end the.
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let's -- the recession. let's talk. we have the deutsche bank chief economist and mr. john osborne, vice president of research and editorial at staffing industry analysts. it was zero hedge as you know that put out a line, you know, put out a bulletin that basically said all those 200,000 some odd jobs created friday were temps and full-time jobs actually fell and that that's been the story of this recovery. i want to get your take on it. >> larry, zero hedge unfortunately is really bad at reporting facts. this is yet another example of that. the part-time employment did rise to very volatile series. as a share of overall employees, from where it was in '07 and the establishment survey shows very good income growth and i don't find that to be the case at all.
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>> you don't believe that's all temps? >> no. there are more temps but there's a lot of good things going on. >> if i can get the chap from zero hedge on the show, we'll have a rebuttal. maybe he'll come on. we'd like to find out and have him come on. let me go to dean baker. if you use the more accepted survey, that maybe isn't right, the payroll survey, the one everybody talks about, the numbers are a lot better. in the past year part-time jobs did go up 195,000. that's not nothing, but full-time jobs went up 1.4 million. almost depends on which survey, dean. the question is is america becoming a part-time country? >> it doesn't depend on which survey, it depends on which month the household survey and zero hedge might not be familiar with that. the numbers are erratic. you have to do that every month. i follow it very closely. in terms of the payroll survey which is the more reliable survey, we've seen a growth in
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temps. we're back to where we were in '06, '07. regulatory uncertainty, can you blame president bush, i guess you can. that's where we are. the overall job quality, there is an issue there. the last month and last three months, more than half the jobs have been in these sectors. restaurants, retail trade and the temporary health sector. those are not particularly good paying sectors. they tend to be at the very bottom. i am worried about that. i don't think you can get an obama care story out of it, but that's not a good story for most workers. >> a lot of people were saying, mr. osbourne, john osbourne, the trouble with these payroll numbers is there's a lot of political interpretation. that's why i'm giving both sides of it. i'm not a fan of obama care. i'm not breaking any news here. temps have been rising for many years. i want to ask you, mr. osbourne, why? >> well, first of all, let me say there are two different
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trends going on. there's a short-term trend in which temporary workers have been outperforming. that's once you get the snap back from the recession. temporary workers are first hired, first fired. during an interview recession you'll see temps being curt and over the next seven years the others will get hired back. we're still not back. temporary penetration, the percentage of temporary percentage of total employment is still around 2% which is right where we were in 2000. we're really hitting the ground. >> you're saying it pops on both houses. you're saying even temp hiring ain't all that great? >> what i'm saying is the temporary labor as the percentage of total employment has a gradual long-term trend, a secular trend increasing, but it's not a huge thing. there's a short-term snap back going on.
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>> some people blame obama care. some people just want the flexibility and the cost cutting, joe. they don't want to make permanent hires, they don't want to invest in pensions, they don't want to invest in health care. the whole game is changing. do you think that's true? and how does is that impacting this so-called economic recovery which i think dean would say is weak. >> i may not be a fan of obama care, but if it were impacting the economy, we'd see hours increase and they're not. that's a leading indicator of output. it's high at a 34.5 reading. i don't think it's in the data. these are preliminary estimates. we tend to revise employer hires. it's been a big industry. this is not the final print when you look at tax receipts, they've been rising at a six-year high. i think there's a lot of good
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income out there. that's why you see things like vehicle sales perform as well as they are. income is doing quite well. >> dean baker also to be fair, construction hiring is also up. i acknowledge that manufacturing has slowed down. the housing sector is improving. the trade sector, retail trade is doing well. now, dean, let me just get your point of view right. you don't care about the temps debate, you're saying the recovery is too week. >> we're seeing growth 2u7bd% for the last three years. that's very hard to get excited about. the trend of growth by cbo and other estimates, somewhere between 2.2 and 2.5%. we're not even keeping pace with trend. keep in mind, we're down by 6% from potential gdp. if we're not keeping pace with trend, i don't see how anyone could be happy. we could always say it could be worse, that's true, but it's very hard to talk about a story where we don't even get back to
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full employment by the end of the day. >> and there's no inflation. >> and there's no inflation. >> and there's no inflation. here i am agreeing with dean baker. oh, my gosh. >> your potential is 2%. it may be 1%. there's been no capital deepening. >> that's right. what dean baker is saying, it's a very subparaneem mick recovery. that breaks me back to the temps, john osborne. will the temps dominate as never before? >> let me clarify one thing. actually, you mentioned 12% of the employment was temporary labor. agency is temporary labor, that's only about 2%. 10% is contingent labor. short term market in i.t. companies, project work, little bit of contract issue here which
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certainly has grown with the share. i read a survey of large companies of more than 1,000 employees who just finished that, and first up, two things. one is that, yes, the share of the labor force that is contingent is rising. it's continuing to rise in other large companies. they do it simply for flexibility reasons. that's the reason they do it. >> right. not for obama care or regulatory reasons, is that what you're saying? >> we asked them that question. which kinds of work are you -- >> did you ask them about obama care and regulation, how did they answer? quickly please. >> actually, there was more project work, which is typically where you get a project and you complete it, it's an hourly thing. more outsourcing, but not more temporary labor. >> we have to leave it there. i'm not sure we settled it except it is still a subpar recovery. the question is will it pick snup joe, jon, thank you. dean baker will come back in a moment because larry summers as
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fed chairman, that is the buzz in the washington post and elsewhere. summers as fed chairman. wall street journal says summers wants the job. summers out there with his plan for corporate tax reform which i think is totally progrowth. we'll look at those stories just ahead on "kudlow." in miami, coca-cola is coming together with latino leaders
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big news tonight. former obama economic advisor, larry summers who was also a short list contender to become the next fed chairman is coming out in favor of corporate tax reform. oh, my goodness. america currently has the highest corporate tax reform today. summers is calling for a 15% tax on the repatriation of foreign profits held overseas by american corporations. i think it's a couple of trillion todollars. that's pro growth tax reform. we welcome dan mitchell who is a senior fellow with the cato institute. i want to do the repatriation. summers as fed chairman, dan mitchell. when he was deputy to robert
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rubin, the united states ran a very strong dollar policy. now whether that was by design or happenstance, larry summers was the deputy. what would you think about summers as a fed chairman? >> well, if they have that policy by design in the 1990s, not just on monetary policy but also restraining government spending and deregulation and the other good things that happened during the clinton years, then i think it would be great to have larry summers not only in charge of the fed but in charge of president obama east's economic policy overall. i'm not sure deep down he believed in the policies. >> that's the thing, before we complete this. there are two different larry summers. in the clinton years summers was a fiscal conservative and solid man working under robert rubin. in the obama years he becomes a
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free spending tstimulus guy. i don't know if he is for obama care, would the real larry summers please stand up, dean? >> the obama years he had to deal with the fallout from the clinton years. that got us on the bubble of the economy of the 90s. that got us in a stock bubble that burst that got us to the session in 2001. we got knew the housing bubble which guess what, burst. that gave us the catastrophe that we needed and large stimulus to boost the economy. >> do you blame summers for the housing bubble? because that occurred in the clinton years. >> well, it began in the clinton years. >> that's right. >> i think summers began -- >> it began. >> it began. bush was sitting there and the idea that he couldn't do anything to change the course, i don't necessarily have great respect for president bush's economic abilities. he was sitting there. he had plenty of time to change courses. >> i just wanted to ask that.
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dan mitchell, let me come back to the principle matter at hand, with i is a 15% tax on the repatriated profits of american corporations. these are overseas profits. what's your take on that? i'm sure you read summers' op ed. >> first, we should have a 15% corporate tax rate overall. we have a 35% federal tax rate on u.s. sourced income and then a 15% sourced income. well, if it's so good to have a 15% rate to have it on foreign sourced goods, why aren't we lowering our u.s. corporate tax rate as well? having said that, it's clearly a positive sign that he recognizes that our worldwide tax system makes it very difficult for u.s. conditions to compete for market share abroad. i deal with it as a positive, albeit not as big as we think, development. >> dean baker, let me go to you. do you agree that we should give
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a tax break to american companies to repay repay the trt their profits. some like me think we will flourish. do you agree? >> no, i don't. we did that back in '04-'05. none of that went to investment. >> those were bush's best years. >> we know the data investment. with obama, it's much lower. >> you had five years of job creation. >> it's all to do with the tax code. i want to have the same tax rate, dan's right, same tax rate on domestic and foreign taxes. the way to go is a unitary tax. otherwise we have apple which is very good of developing iphones and ipads and they also develop itax havens. we don't care where you went and made your profit, we know what
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your total profit is, 50% of your sales are in the u.s., we're going to have 50% of your profits in the umpt s. and that's your tax base. then we don't have to play games. >> dan mitchell, what do you think of that? >> first of all, i don't agree with dean. that's the job of other governments to tax that. we should have a territorial system. what larry summers did is within the confines of believing in a worldwide system that minimizes or mitigates the damage. the overall point that i was making is we're having a very high corporate tax rate discussion. we are shooting ourselves in the foot. >> who pays that? >> the marginal tax rate is the 35%, yes. but the additional investment and additional job creation is the marginal tax rate. you don't want to earn more money, at least in america, if you're taxed too heavy. >> these guys are -- look, first
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of all it would be great to have a simple system so they don't have to play games. second of all, as they are higher they pay a lesser and lesser tax rate. you could leave with summers' plan but, dean, you couldn't? is that what i'm hearing? >> i don't think it would be either system. i forget where i'm stealing it from. let's get rid of the corporate tax. give them an apartment. we could argue what it is 15%. nonvoting shares get treated like common shares. they never have to file a tax return. >> i don't know what you do with guys like me. i don't think there should be a corporate tax. people pay taxes, not corporations. >> i gave you one. >> i've got to go. >> 15% across the board. let's learn from the success of other countries. >> everything. personal income, corporate income. >> dean baker, thank you very much.
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dan mitchell, great to see you again. now, folks, we've seen these pictures of escalating violence in egypt. it begts a question, are people headed to a violent civil war and what should president obama do about this. we're going to try to get some answers next up. i met a turtle friend today so, you don't get that very often. it seemed like it was more than happy to have us in his home. so beautiful. avo: more travel. more options. more personal. whatever you're looking for expedia has more ways to help you find yours. ♪ honey, is he too into this car thing? [ mumbling ] definitely the quattro. ♪ honey? huh? a5. what?
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another violent day in egypt. at least 54 people were killed and 400 injured.
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as muslim brotherhood people clashed with the egyptian military. president obama has called for an end to the violence there, but those calls have not yet been heeded. meanwhile, the white house does plan to keep sending money there. press secretary jay carney saying today u.s. aid to egypt will continue. let's try to talk about this with some sense here now is elaine mccall, senior geopolitical analyst at bark lay. i have nothing but ugly questions. the egyptian army versus the muslim brothers. what would happen there? it's going to come down to that kind of violence? >> the worst fear is you have a repeat of what happened in algeria where the second round of elections were canceled. then they had a brutal long civil war, 100,000 killed. are we there yet? by no means at this point. >> i know that there's some role
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playing here, all right? generally, they are pledging their lives. >> oh, yeah. >> to make this decision. >> absolutely. >> i just wondered in your opinion how strong is the egyptian army? a lot of them were trained by the united states but does it have the money to wage war. so they have money, good hardware. >> do you think we should keep doing that? >> its think it's a tough call. we have a law against giving money against countries that have a military coup. you give them money because we're kind of happy. in terms of the military, they're unified in terms of stability. if you don't include the muslim brotherhood in the political process, he could feel very, very violent the next couple of months. >> what are the chances that the army or the military will at the end of the day have to take it over as a dictator ship? >> at this point they're running the country right now.
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there's no sense that the civilians are calling the shots. the question is are they going to transition to a representative civilian government or will you have window dressing? >> this general c.c., he's going to be some kind of vice president. sounds like a bank. you'll never hear from him. they brought in a technocratic guy. is he the guy to put this together? >> that's one of the biggest challenges going forward is they're bankrupt. will they sure vief? were they able to get an ims loan? >> they've never really had a market economy, did they? that's one of the issues here, absolutely. >> in this type of volatile political environment, that's really quite dire. >> if the u.s.a. for argument's sake, if the u.s.a. and saudi
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arabia give the army the money, it's going to stay with the army, right? it's not going to trickle down into the rest of the country? >> the 1.3 billion, that really does go directly to the milit y military. you can have 200,000 in economic assistance, but that is not small numbers. >> helena kroft, thank you for the numbers. we appreciate your watching. i'm larry kudlow. boy, do they need market economics in egypt. might need extra coveragedidn'tu for more expensive items? and what if you didn't know that teen drivers are four times more likely to get into an accident? 'sup the more you know, the better you can plan for what's ahead. talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum -bum ♪
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>> tonight on the car chasers... tell me it's a $100,000 car-- is he on crack? >> the guy that wants to sell it has some issues with the wife. she found out about it. she didn't know what was going on with it. >> we head to los angeles on a car-buying frenzy. >> we're super close. >> how close are we? >> will the city of dreams be a boom... oh, my goodness, look at that. or a bust? $4,000. >> you think i just got off the last banana boat? >> and later... >> i'm gonna at least go look at some properties. >> the gang and i have to make a decision... oh, look at this. that could change the future of flat 12... >> here's the main warehouse area. >> i dig this. forever. we're toying with the idea of doing something in l.a. >> what are you talking about? >> my name is jeff allen.